Portfolio 2 Capital Investment Appraisal: The following information relates to Stars limited. The company has an opportunity to invest in one of two potential & mutually exclusive (but not both) projects. Each project will involve the purchase of a new plant. The following data relates to both projects: m Additional Information: a The initial cash investment for both plants will be E120000. The purchase would take place on January 1, 2020. It is assumed that all other cash flows would be received on 31 December each year. - Both plants would have a life ofsix years. Plant 1 has no residual value and Plant 2 has a residual value of 9000. - The company uses a straight-line method of depreciation. - The cost of capital is 16%. Required: a) Using appropriate investment appraisal techniques, advise senior management on whether they should opt for project A or project B. (20 Marks} b) Discuss the limitations of using investment appraisal techniques in long term decision making. (10 Marks) (Total: 30 marks)